Texas ERS proposes private equity plans for 2022

The US pension plan proposes a 5-year tactical pacing model to meet its private equity allocation target.

Institution: Employees Retirement System of Texas
Headquarters: Austin, US
AUM: $33.9 billion
Allocation to alternatives: 33.1 percent

Following its August board meeting, the Employees Retirement System of Texas has approved the proposed private equity tactical plans for fiscal year 2022, a contact at the pension informed Private Equity International.

For the fiscal year 2022,

  • Texas ERS is proposing to target commitments totalling $800 million with a 25 percent range ($600 million to $1 billion);
  • The private equity team recommends 10-12 new primary fund commitments and six to eight new co-investments across the risk spectrum and geographies;
  • The recommendation remains consistent with the pension’s steady investment pace. With this strategic pacing model, ERS forecasts the PE program returning to its 13 percent allocation target by 2026;
  • Buyouts will remain the dominant strategy of the portfolio, followed by growth equity and venture capital.

For the current fiscal year, the PE program has received a total commitment of $799.6 million through eight existing fund managers, four new relationships and 10 co-investments. The PE team expects to approve an additional $65 million before the end of 2021, bringing the total committed amount to $864.6 million.

Illustrated below are the retirement trust’s recent fund commitments and the geographical and strategy composition of the private equity portfolio.

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